Following on the tails of recent updates in New York and California’s equal pay laws, New Jersey, Massachusetts, and California all have bills pending in their state legislatures that would seek to eliminate pay differentials on the basis of sex and other protected categories.
The NJ Amendment
NJ employers may be curious why this amendment is necessary, as the state’s Equal Pay Law already prohibits discrimination in the rate or method of payment of wages to an employee because of his or her sex. The NJ Amendment, which has passed in the Senate and must now move through the House before being delivered to the Governor, would amend the Law Against Discrimination to prohibit differentials among employees of different sexes who perform “substantially similar” work. The NJ Amendment would, like the federal Lilly Ledbetter Fair Pay Act, allow a plaintiff to bring a claim based on “continuing violations” of the law, thereby expanding the statute of limitations on pay differentials.
The law mimics the New York and California laws, in that employees may bring claims based on a disparate impact – i.e., a neutral factor produces a wage differential based upon sex, and the employer did not adopt an alternative business practice that would serve the same purposes without the wage differential.
The NJ Amendment provides that comparisons of wages are based on rates “in all of an employer’s operations or facilities.” This broad definition is troublesome for employers, as it does not clearly state the reach of the law. In contrast, the New York law limits geographic comparisons based upon regions no larger than a county. The California law does not have any type of geographic limitation on wage comparisons.
The MA Amendment
The MA Amendment goes significantly further than the NJ Amendment, and follows more closely with the recent changes in the New York laws, as part of the NY Governor Cuomo’s Women’s Equality Agenda. In addition to prohibiting pay differentials on the basis of gender without a justifiable factor other than sex, the MA Amendment (1) provides that an employees’ seniority for pay purposes may not be reduced due to time spent on protected family, medical, and parental leave (including pregnancy-related leave), (2) establishes pay transparency provisions, and (3) creates an affirmative defense for employers who perform self-evaluations of pay practices.
The MA Amendment, which also has passed in the Senate and must now move through the House before being delivered to the Governor, amends the current Massachusetts Equal Pay Act to define “comparable work” to mean “work that is substantially similar in content and requires substantially similar skill, effort and responsibility and is performed under similar working conditions; provided, however, that a job title or job description alone shall not determine comparability.”
Unlike all other recent equal pay laws, the MA Amendment permits employers to base pay differentials based upon geographic location if one location has a lower cost of living based upon the Consumer Price Index.
Interestingly, the MA Amendment would also prohibit employers from obtaining an applicant’s salary history on an application or during interviews. Earlier this year, the California legislature passed a bill that would prohibit employers from seeking past pay information from applicants; however, that bill was vetoed by Governor Brown.
The CA Amendment
The CA legislature has recently introduced a new amendment to the fair pay law, which was just amended earlier this year. The Wage Equality Act of 2016 would expand the law’s protections to race- and ethnicity-based pay differentials.
While states are leading the charge with updates to equal pay laws, the EEOC is also stepping up equal pay enforcement with their proposal to modify the EEO-1 forms to include pay information. This push to gather more information regarding pay among various categories may lead to an increase in pay-related claims over the next few years. To help avoid such claims, employers should consider auditing job titles and compensation methods to ensure compliance with each jurisdiction’s equal pay laws.